EUR/USD: Consolidates its recent surge

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While the statistical calendar, rather scattered since the beginning of the week, leaves traders alone, and fears about the Yen gradually fade, the Euro / Dollar consolidated its violent rise that began at the end of last week.

Everything accelerated on Thursday, with the publication of an activity indicator (ISM manufacturing), two points below expectations that were themselves pessimistic, and on Thursday, with a report on employment that was particularly disappointing, notably on the job creation front, and the surprise increase in unemployment, to 4.3% of the active population. On Wall Street, the penalty was heavy, notably on technology companies that are just coming out of a quarterly ball that was, to say the least, contrasting.

The scenario of a cut, not of 25, but of 50 basis points in the remuneration of the Fed Funds, is gaining weight as the American macroeconomic statistics cool the mood. A little relief, however, yesterday with the ISM services which came out at 51.4, slightly above expectations.

“Analysts are talking about the possibility that the Fed will meet urgently before the September deadline to lower its rates,” notes Christopher Dembik, investment strategy advisor at Pictet AM, for whom this option “seems crazy.”

“Incidentally, we do not see how a rate cut by the Fed would succeed in stemming the panic,” the analyst says.

Note that the monthly deficit of the trade balance for June in France came out at 6.1 billion euros, against a target of -7.5 billion euros. The calendar is getting denser tomorrow with, among other joys, the new weekly registrations for unemployment benefits, which will be all the more closely followed since the latest NFP report brought its share of bad surprises.

At midday on the foreign exchange market, the Euro was trading against $1,0910.

KEY GRAPHIC ELEMENTS

Our short positions are immediately stopped on the EURUSD currency pair, with the volatility that exploded on Friday. We remain waiting for clear signals allowing us to glimpse a new sustainable directional, before exposing ourselves again.

MEDIUM TERM FORECAST

Considering the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD) parity.

We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity rates are positioned between the support at 1.0906 USD and the resistance at 1.1012 USD.

DAILY DATA CHART